Canada: Take Two Pills And Call Your Lawyer In The Morning: Consumers Allege They Were Misled By The Makers Of COLD-FX

The makers of COLD-FX might be
feeling a little under the weather after appearing in the BC
Superior Court to further respond to allegations that untrue
representations and omissions induced consumers to purchase the
drug product that was ineffective and therefore
"worthless" if taken in accordance with the
representations.

The claim against Valeant
Pharmaceuticals, and its subsidiary, Afexa Life Sciences, was
started in 2012 by a Vancouver Island resident Don Harrison over
advertising saying that COLD-FX provided "immediate relief of
cold and flu" if taken over a three-day period at the first
sign of cold or flu symptoms. A study showed that the product
provides no such short term relief. Rather, patients experienced a
therapeutic effect only after taking the product daily for at least
two months, and six months in the case of seniors. Harrison alleges
that the companies continued to "knowingly or recklessly"
promote COLD-FX as a short term remedy despite evidence to the
contrary. A similar action has been commenced in Saskatchewan.

COLD-FX is a top-selling natural
health product in Canada, with sales topping nearly $120-million as
recently as 2011, according to a November 15, 2015 Globe and Mail
article, "Why COLD-FX is too good to be true".
As part of one COLD-FX natural health product license, Health
Canada has approved a number of claims for COLD-FX, including that
the product:

Helps reduce the frequency, severity and duration of cold and flu
symptoms by boosting the immune system. ...Provides further
reduction of cold and flu symptoms when taken with a flu shot...
Clinically proven to reduce the frequency, severity and duration of
cold and flu symptoms in individuals over 65 by boosting the immune
system. ... helps reduce overall symptoms of sore throat, runny
nose, sneezing, nasal congestion, malaise, fever, headache,
hoarseness, ear-aches and cough.

The plaintiff in the BC action is
seeking class certification so that anyone who bought COLD-FX for
the short-term relief of cold and flu symptoms will be able to
apply for a refund. The companies have denied that allegations and
are contesting the application for class-action certification.

The BC Supreme Court has previously
refused to certify a proposed consumer class action concerning
misleading advertising. In Clark v Energy Brands Inc.,
2014 BCSC 1891, the plaintiff alleged that Energy Brands Inc. and
Coca-Cola Ltd., systemically misrepresented bottled beverages
beginning with the trademark VITAMINWATER, and the description that
the beverages are "nutrient enhanced water beverage", and
misled consumers to believe the products were healthy beverages
with a minimal amount of sugar. The Court refused to certify a
class stating that the plaintiff had not met the requirements of
the main requirement of the BC Class Proceedings Act,
namely, whether "the claims of the class members raise common
issues, whether or not those common issues predominate over issues
affecting only individual members". The Court stated:

However, in my view whether the labelling and marketing of the
product has actually misled a consumer is an inherently
individualistic and fact-based question. [¶120]

There is of course, no evidence that all consumers were misled, at
all times, in respect of each and every consumer transaction in
question. No such evidence would be possible. Yet the relief sought
by the plaintiff in the context of the plaintiff's arguments
for potential remedies would practically amount to such a
conclusion. Otherwise there would be no utility in the declaration
sought. [¶125]

The COLD-FX class action also
follows another recent class action launched against Boiron Inc. on
behalf of consumers who purchased Oscillococcinum or Oscillo, a
homeopathic product marketed to treat the flu. The class action
claimed that the product was falsely marketed with respect to the
efficacy of the product and the presence of an ingredient –
that consumers were misled into purchasing a product that was no
more effective than a placebo sugar pill, with ingredients that are
not medically effective, and diluted to the degree of being not
present in the final product. The class was not certified by the
Superior Court of Quebec, and a motion to dismiss the appeal was
denied. The Superior Court found that the petitioner did not
demonstrate a prima facie case of false representations.
The Court found that Boiron represents that the product relieves
flu symptoms, and not that it prevents, cures or fights the flu, or
even that it does so with an active ingredient. Further, the
evidence did not demonstrate the product is nothing more than a
placebo. In fact, the expert opinion filed by the petitioner
acknowledged an ability of the product to relieve flu-like symptoms
"slightly better" than a placebo. Further, evidence filed
with the Natural Health Products Directorate of Health Canada in
the process of obtaining a license for the product included a
randomized placebo-controlled study. The petitioner argued
that the efficacy of the product should be assessed on the basis of
clinical rather than statistical evidence, the latter "which
seems to satisfy Health Canada".

The COLD-FX and the Oscillo Boiron
cases raise the question of how to reconcile allegations of false
and misleading representations against the fact that the products
were licensed by the Natural Health Products
Directorate. Will a product license absolve the license
holder from liability for false and misleading representations?
Will the following comments by the Supreme Court of Canada in
another class action case be applied to licensed products?

[C]ompliance with statutory obligations is not always determinative
of the issue of civil fault ... [C]are must be taken . . .
not to conflate the notion of civil fault and the violation
of a statutory norm, whether in a commercial setting or elsewhere
... [J]ust because a failure to discharge a statutory obligation
leads to a demonstration of fault in all but the most exceptional
cases, it does not follow that a civil fault is absolved where
there is no such failure.

The claimed misrepresentations in
the COLD-FX case relate largely to how quickly COLD-FX takes effect
("immediate relief ...", "at the first sign of
symptoms for optimal results", "stops colds & flu in
their tracks"). The plaintiff claims "at no time has
COLD-FX been permitted by Health Canada to make (such)
representations." Interestingly, several COLD-FX
licensed products are branded "COLD-FX First
Signs", with approved recommended use including
"Take at first signs of cold to help reduce the frequency
of colds and flus." These products contain additional
ingredients to ginseng (panax quinquefolius).

The COLD-FX and the Oscillo Boiron
cases are also interesting to Canadians given that our punishing
winters mean these products are likely found on the shelves of many
medicine cabinets. Beyond that, the cases are noteworthy given the
attempt at class certification to address advertising claims that
consumers believe are misleading. For a few years now, we
have heard from our US counterparts that that risk of misleading
advertising is not just regulator or competitor action, but by
consumers acting as a class. Although class actions have not been
prevalent in Canada, this may mark the beginning of a trend, and a
significant change to the risk to companies when they make product
claims.

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